diff --git a/source/last-array-element.d.ts b/source/last-array-element.d.ts
index a27e5eaa0..7c67ffdc2 100644
--- a/source/last-array-element.d.ts
+++ b/source/last-array-element.d.ts
@@ -1,3 +1,8 @@
+import type {If} from './if.d.ts';
+import type {IfNotAnyOrNever, IsExactOptionalPropertyTypesEnabled} from './internal/type.d.ts';
+import type {SplitOnRestElement} from './split-on-rest-element.d.ts';
+import type {UnknownArray} from './unknown-array.d.ts';
+
 /**
 Extract the type of the last element of an array.
 
@@ -16,21 +21,69 @@ const last2 = lastOf([true, false, 'baz', 10]);
 //=> 10
 ```
 
+Note: When the array ends with an optional or rest element, the last element's position becomes ambiguous. In such cases, the result is a union of the types of all elements that could potentially be the last element of the array.
+
+@example
+```
+import type {LastArrayElement} from 'type-fest';
+
+type A = LastArrayElement<[string, number?, bigint?]>;
+//=> bigint | number | string
+
+type B = LastArrayElement<[string, number, bigint?, ...boolean[]]>;
+//=> boolean | bigint | number
+```
+
+Note: If empty array is a valid value for the array type, the result includes an `undefined`. This aligns with the runtime behavior of `[].at(-1)`.
+
+@example
+```
+import type {LastArrayElement} from 'type-fest';
+
+type A = LastArrayElement<[]>;
+//=> undefined
+
+// `[]` is assignable to `string[]`
+type B = LastArrayElement<string[]>;
+//=> string | undefined
+
+// `[]` is assignable to `[string?, number?]`
+type C = LastArrayElement<[string?, number?]>;
+//=> number | string | undefined
+
+// `[]` is assignable to [string?, number?, ...bigint[]]`
+type D = LastArrayElement<[string?, number?, ...bigint[]]>;
+//=> bigint | number | string | undefined
+```
+
 @category Array
 @category Template literal
 */
-export type LastArrayElement<Elements extends readonly unknown[], ElementBeforeTailingSpreadElement = never> =
-	// If the last element of an array is a spread element, the `LastArrayElement` result should be `'the type of the element before the spread element' | 'the type of the spread element'`.
-	Elements extends readonly []
-		? ElementBeforeTailingSpreadElement
-		: Elements extends readonly [...infer U, infer V]
-			? V
-			: Elements extends readonly [infer U, ...infer V]
-				// If we return `V[number] | U` directly, it would be wrong for `[[string, boolean, object, ...number[]]`.
-				// So we need to recurse type `V` and carry over the type of the element before the spread element.
-				? LastArrayElement<V, U>
-				: Elements extends ReadonlyArray<infer U>
-					? U | ElementBeforeTailingSpreadElement
-					: never;
+export type LastArrayElement<TArray extends UnknownArray> =
+	IfNotAnyOrNever<TArray, {
+		ifNot: TArray extends UnknownArray // For distributing `TArray`
+			? SplitOnRestElement<TArray> extends readonly [infer BeforeRest extends UnknownArray, infer Rest extends UnknownArray, infer AfterRest extends UnknownArray]
+				? _LastArrayElement<BeforeRest, Rest, AfterRest>
+				: never
+			: never;
+	}>;
+
+type _LastArrayElement<BeforeRest extends UnknownArray, Rest extends UnknownArray, AfterRest extends UnknownArray> =
+	AfterRest extends readonly [...any, infer Last] // Note there are no optional elements in `AfterRest`.
+		? Last // If there's a `Last` in `AfterRest`, then that's the result.
+		: Rest[number] | BeforeRestLastElement<BeforeRest>; // Otherwise, the result is union of the `Rest` element and the last element in `BeforeRest`.
+
+type BeforeRestLastElement<BeforeRest extends UnknownArray, Accumulator = never> =
+	BeforeRest extends readonly []
+		? Accumulator | undefined
+		: BeforeRest extends readonly [...any, infer Last]
+			? Last | Accumulator
+			: BeforeRest extends readonly [...infer Rest, (infer Last)?]
+				? BeforeRestLastElement<
+					Rest,
+					// Add `undefined` for optional elements, if `exactOptionalPropertyTypes` is disabled.
+					Last | Accumulator | If<IsExactOptionalPropertyTypesEnabled, never, undefined>
+				>
+				: never;
 
 export {};
diff --git a/test-d/last-array-element.ts b/test-d/last-array-element.ts
index 6cc9980e6..c1a25be7d 100644
--- a/test-d/last-array-element.ts
+++ b/test-d/last-array-element.ts
@@ -1,25 +1,67 @@
 import {expectType} from 'tsd';
 import type {LastArrayElement} from '../index.d.ts';
 
-declare function lastOf<V extends readonly unknown[]>(array: V): LastArrayElement<V>;
-const array: ['foo', 2, 'bar'] = ['foo', 2, 'bar'];
-const mixedArray: ['bar', 'foo', 2] = ['bar', 'foo', 2];
+// Empty array
+expectType<undefined>(undefined as LastArrayElement<[]>);
+expectType<undefined>(undefined as LastArrayElement<readonly []>);
 
-expectType<'bar'>(lastOf(array));
-expectType<2>(lastOf(mixedArray));
-expectType<string>(lastOf(['a', 'b', 'c']));
-expectType<string | number>(lastOf(['a', 'b', 1]));
-expectType<1>(lastOf(['a', 'b', 1] as const));
+// Only required elements
+expectType<boolean>({} as LastArrayElement<[number, string, boolean]>);
+expectType<boolean>({} as LastArrayElement<readonly [number, string, boolean]>);
 
-declare const leadingSpreadTuple: [...string[], object, number];
-expectType<number>(lastOf(leadingSpreadTuple));
+// Required and optional elements
+expectType<2 | 3>({} as LastArrayElement<[1, 2, 3?]>);
+expectType<1 | 2 | 3>({} as LastArrayElement<readonly [1, 2?, 3?]>);
+expectType<number | boolean | bigint | string>(
+	{} as LastArrayElement<[null, string, bigint?, boolean?, number?]>,
+);
 
-declare const trailingSpreadTuple1: [string, ...number[]];
-expectType<number | string>(lastOf(trailingSpreadTuple1));
+// Required and rest element
+expectType<3 | string>({} as LastArrayElement<readonly [1, 2, 3, ...string[]]>); // Rest element at the end
+expectType<'z'>({} as LastArrayElement<[1, 2, 3, ...boolean[], 'x', 'y', 'z']>); // Rest element in the middle
+expectType<string>({} as LastArrayElement<readonly [...bigint[], string]>); // Rest element at the start
 
-declare const trailingSpreadTuple2: [string, boolean, ...number[]];
-expectType<number | boolean>(lastOf(trailingSpreadTuple2));
+// Only optional elements
+expectType<'a' | undefined>({} as LastArrayElement<['a'?]>);
+expectType<{data: string[]} | undefined>({} as LastArrayElement<readonly [{data: string[]}?]>);
+expectType<string | boolean | bigint | undefined>({} as LastArrayElement<[string?, boolean?, bigint?]>);
 
-// eslint-disable-next-line @typescript-eslint/array-type
-declare const trailingSpreadTuple3: ['foo', true, ...(1 | '2')[]];
-expectType<true | 1 | '2'>(lastOf(trailingSpreadTuple3));
+// Explicit `undefined` in optional elements
+expectType<1 | 2 | undefined>({} as LastArrayElement<[0, 1, (2 | undefined)?]>);
+expectType<1 | 2 | undefined | string>({} as LastArrayElement<readonly [0, 1, (2 | undefined)?, ...string[]]>);
+
+// Required, optional, and rest element
+expectType<2 | 3 | string>({} as LastArrayElement<[1, 2, 3?, ...string[]]>);
+expectType<number | string | bigint>({} as LastArrayElement<readonly [number, string?, ...bigint[]]>);
+
+// Optional and rest element
+expectType<1 | string | undefined>({} as LastArrayElement<readonly [1?, ...string[]]>);
+expectType<1 | 2 | 3 | bigint | undefined>({} as LastArrayElement<[1?, 2?, 3?, ...bigint[]]>);
+
+// Labelled tuples
+expectType<number>({} as LastArrayElement<[x: number, y: number]>);
+expectType<string | number>({} as LastArrayElement<readonly [x: string, y?: number]>);
+expectType<string | number>({} as LastArrayElement<[x: string, ...rest: number[]]>);
+
+// Union elements
+expectType<'d' | 'e'>({} as LastArrayElement<['a' | 'b', 'c', 'd' | 'e']>);
+expectType<3 | 'c' | 'd' | 'e'>({} as LastArrayElement<[1 | 'a', 2 | 'b', 3 | 'c', ('d' | 'e')?]>);
+expectType<boolean | string | number>({} as LastArrayElement<[bigint, boolean, ...Array<string | number>]>);
+
+// Unions
+expectType<3 | 6>({} as LastArrayElement<[1, 2, 3] | [4, 5, ...string[], 6]>);
+expectType<number | bigint | undefined>({} as LastArrayElement<readonly [string, number] | bigint[]>);
+expectType<1 | 2 | 3 | 'a' | 'b' | undefined | 'd' | 'e' | 'g'>(
+	{} as LastArrayElement<readonly [1, 2?, 3?] | ['a'?, 'b'?] | ['c', 'd', ...Array<'e'>] | [...Array<'f'>, 'g']>,
+);
+
+// Non-tuple arrays
+expectType<string | undefined>({} as LastArrayElement<string[]>);
+expectType<number | undefined>({} as LastArrayElement<readonly number[]>);
+expectType<number | bigint | undefined>({} as LastArrayElement<ReadonlyArray<number | bigint>>);
+expectType<any | undefined>({} as LastArrayElement<any[]>);
+expectType<undefined>({} as any as LastArrayElement<never[]>);
+
+// Boundary cases
+expectType<any>({} as LastArrayElement<any>);
+expectType<never>({} as LastArrayElement<never>);